Important tips to becoming financially prudent

From a tender age, we’ve been advised on the need to save, save and save. We are told that in order to achieve our dreams, we need to be financially prudent, to spend money on the things we need and not the things we want. To be sincere, scores of people struggle with differentiating between their wants and their needs. Some are caught in the unending web of dilemma; stuck between embracing frugality and simply ascribing to the principle of YOLO (you only live once). Irrespective of the school of thought you belong to, there is no better decision that to choose the right path and going ahead to be financially prudent and living your dream

Every single day, we are faced with the task of choosing something. Choosing the right partner, choosing the right course to study, choosing the right job, choosing a great crossbow, choosing the right outfit to wear and so on and so forth. It is like our lives are a summation of the choices we make (they indeed are). That aside, you probably want to be financially independent but have been struggling to do so or rather don’t know how to go about it. If that’s the case, read to learn a few tips about becoming financially prudent.

Never ever work outside your budget

The first rule of thumb if you want to be financially sound is to work within your budget. In other words, live within your means. Avoid impulse spending and stick to the budget that you’ve drafted. Do not drift from your budget and you won’t have to deal with money deficits.

Prioritize your goals for the long term

It is okay to want to save money for a car or even for your kid’s college fees. However, it is important that you prioritize things that are more important. If faced with the challenge to save for retirement first or to save for your kid’s college fee, go for retirement first. If you don’t have sufficient funds to see you through when you are in retirement, you won’t be able to sustain your kids in college. The rule of thumb is prioritize.

Meet needs sufficiently before wants

Don’t be the kind of person who wants to blend. You want to be the first person to own a particular model of car, phone or whatever you have a desire for. If you don’t have the money to own the aforementioned, save until you have it. Getting into debts to satisfy your wants is a serious mistake you should never make. Meet your needs before you can meet your wants.

Track your expenses

Do not be a spendthrift who overspends at the first opportunity. Learn financial discipline and stick to the money you’ve allocated yourself in any given month. Once that money is exhausted, wait till the next month for the next allocation. Overspending gets you into debt. Always work with what you have and what you’ve planned for and sooner than later you will be financially prudent.

Create an emergency fund

The truth of the matter is that you don’t know what will happen tomorrow. The future is uncertain and therefore it is important that you create an emergency fund to cushion you should something that needs urgent money happens.

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